U.S.-China Trade Talks Spotlight Lingering Phase One Deal Frustrations

Washington, D.C. — Ongoing trade negotiations between the United States and China have brought renewed attention to the unresolved issues stemming from the 2020 Phase One trade agreement. Treasury Secretary Scott Bessent recently underscored that China failed to fulfill its commitments under the deal, which required Beijing to boost purchases of U.S. goods and services by $200 billion above 2017 levels over a two-year period.

Phase One Deal: Missed Targets and Enforcement Gaps

The Phase One agreement, signed in January 2020, was intended to ease trade tensions by addressing structural concerns such as intellectual property protections, technology transfer, and expanding U.S. exports to China. However, data shows China ultimately purchased only about 58% of the promised U.S. goods and services, falling well short of the $200 billion target. Analysts and officials have criticized the agreement for lacking robust enforcement mechanisms, which allowed Beijing to miss these targets without facing significant consequences.

Impact on Current Negotiations

This history of unmet commitments is now shaping the tone and substance of new trade talks. The U.S. is pressing for stronger accountability and enforcement provisions in any future agreements, seeking to avoid a repeat of the Phase One shortcomings. The Biden administration has faced bipartisan criticism for what some see as insufficient efforts to enforce the deal, with many lawmakers and industry groups calling for a tougher stance on Chinese compliance.

Recent Developments: Tariff Reductions and Temporary Truce

In a recent joint statement, the U.S. and China agreed to a substantial, temporary reduction in tariffs—each side lowering certain tariffs by 115% for 90 days, while retaining a baseline 10% tariff. China has also agreed to suspend some retaliatory tariffs and non-tariff measures, while the U.S. maintains key tariffs imposed in previous years. This move is seen as a step toward de-escalating trade tensions, but experts caution that the underlying issues remain unresolved and the current truce is fragile.

Looking Ahead: Tougher Stance and Uncertain Outcomes

With a new administration signaling a more aggressive approach to trade enforcement, the U.S. is expected to demand clearer benchmarks and automatic penalties for non-compliance in future deals. Both sides face pressure to deliver tangible results, but the path to a comprehensive, enforceable agreement remains uncertain. Analysts warn that while the recent tariff reductions offer temporary relief, the fundamental disagreements over market access, technology, and state subsidies are likely to persist.

“The natural starting place for further trade talks is to pick up where the 2020 Phase One Trade Agreement left off, which was generally agreeable to Beijing. Otherwise, the road to an updated trade agreement is uncertain.”

As talks continue, businesses and markets are bracing for further developments, aware that the outcome will have significant implications for global trade and economic stability.